Film tax credits: Commotion pictures

Bill C-10: Is it censorship or merely inept?

Canadian film and TV creators have been up in arms over reports the Harper government is pushing through legislation that could retract a production’s eligibility for a tax credit if it is deemed offensive. Much of the ensuing argument has swirled on the moral high ground, with filmmakers claiming the legislation amounts to censorship while conservative politicians defend it as protection against tax dollars being directed to inappropriate productions.

On March 4, Heritage Minister Josée Verner declared, “We won’t stop anybody from producing any kind of movies.” And she pointed out that Bill C-10’s wording is identical to that of a Chrétien-era amendment drafted in 2002 by then–Liberal finance minister John Manley and then–Liberal heritage minister Sheila Copps. This exonerates the Harperites of any accusations of a right-wing evangelical conspiracy.

What it doesn’t do, says David Zitzerman, a partner at Toronto-based law firmGoodmans LLP, is make sense for investors and lenders — not a good quality in a tax law.

Currently, a Canadian production uses the promise of tax credits as surety for production financing. Under C-10, producers could be denied their tax credit certificate if the Heritage department is not satisfied that “public financial support of the production would not be contrary to public policy.” Zitzerman argues the only way such judgment could be made (once someone figures out what “contrary to public policy” means) is after production is completed and money spent.

C-10 contains other head-scratchers, regardless of one’s moral stance: the rule only applies to Canadian-content productions. U.S. productions shooting in Canada and tapping other tax credits would be unaffected. Moreover, a Canadian producer could tap the same tax credits as a U.S. producer.

Sounds like the Harper government should borrow another page from the Chrétien playbook: how about a Clarity Bill for the Income Tax Act?